GROWING local enterprises is an age-old problem in Singapore, but the Economic Strategies Committee (ESC) is not just rehashing past issues when it brings it up for yet another airing.

New problems have sprung up in the aftermath of the financial crisis, said Second Minister for Transport and Finance Lim Hwee Hua on 3 February.

“The general feeling is that actually we do have a lot of capabilities from serving our domestic economy,” said Mrs Lim in an interview with the Straits Times on 3 February.

“Right now the real urgency is to make sure that they are able to be sold abroad.  There’s no shortage of customers.”

The key stumbling block is financing, she said.  That’s partly because of the recent financial crisis, which has made lenders more risk averse.

“For longer term project financing banks have cut back on the tenures of the loans… so you do have a gap there that may stay on as a permanent gap,” explained Mrs Lim, who co-chaired an ESC sub-committee on developing local enterprises.

“Where now financing becomes a pre=requisite for bidding, our companies don’t even get invited because there are no bankers standing behind them,” she added.

“And if you don’t get invited, very soon you’ll be out of that league, you don’t compete any more.”

If Singapore companies don’t get a chance to compete in these overseas markets, the knock-on effect is that they will stagnate, she warned.

This is why Government support for an export-import bank to facilitate project and trade financing- a key recommendation of her committee- is so crucial.

“In recent years, actually, a lot of ex-im banks have been stepping up their activity,” she said.

As for who would set up such a bank, Mrs Lim said that it will have to be fully Government –backed for a start.

The new fund of up to $1.5 billion to invest in Singapore-based small and medium-sized enterprises (SMEs) is therefore an attempt on the part of Government to try and get longer-term funding flowing again to companies.

Mrs Lim noted that various government agencies like the Economic Development Board already have programmes in place that provide seed funding to SMEs with potential.

In a sense, these agencies are picking the “winners” of tomorrow, she said. The new fund just provides some added wind in their sails.

“We’re actually using this (fund) not to suppliant those schemes, but to supply even more capital,” she explained.

Other than supplying financing and capital, the Government can also help by directly engaging the services of local firms more, Mrs Lim added.

The thinking is that the Singapore government itself is a big customer that is constantly demanding new innovations which local firms can work to provide.

“If they win the contracts at the end of that whole innovation development, and the Government is a big consumer, it’s a good track record,” said Mrs Lim.

“They can then carry it with them to other countries and say, well, I’ve served the Singapore Government,” she added.